Wall Street eases as materials, energy fall
US stocks eased on Tuesday as a selloff in commodity prices hit resource shares, while concern about lower supermarket profits battered consumer stocks.
January 05, 2011 / 08:39 IST
US stocks eased on Tuesday as a selloff in commodity prices hit resource shares, while concern about lower supermarket profits battered consumer stocks.
Shares of Supervalu Inc fell nearly 6% after Morgan Stanley told investors to cut holdings in the stock, saying rising food costs will crimp margins. Safeway Inc and Whole Foods Market also slid.The S&P materials index slipped 0.9%, as did the energy index as investors took profit in the commodities space. Materials and energy were among top-performing sectors in 2010.The S&P and Nasdaq pared losses modestly and the Dow edged higher following minutes from the Federal Reserve's December policy meeting that showed officials felt the US economic recovery was still weak enough to warrant monetary support despite growing signs of strength.The market was supported by strength in defensive shares, including the utilities and telecom sectors. "The S&P is pretty buoyant because of the fact that there seems to be a little bit of a renewed interest in the market," said Nick Kalivas, senior equity index analyst at MF Global in Chicago."I think it's subtle but I do think it's present. How long it lasts is obviously the million dollar question."The Dow Jones industrial average added 17.75 points, or 0.15%, to 11,688.50. The Standard & Poor's 500 Index was off 3.07 points, or 0.24%, to 1,268.80. The Nasdaq Composite Index slipped 9.71 points, or 0.36%, to 2,681.81.The market's weakness followed a strong start to the new year on Monday as investors pushed new money into the market. The Dow and S&P 500 recently hit two-year highs as economic data pointed to solid US recovery.While many analysts see another year of gains for the S&P 500, Morgan Stanley offered a more contrarian view, forecasting a year-end target for the S&P 500 below 2010's close.Monday's move was accompanied by a rise in volume, with more than 7.7 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, above the 50-day moving average. The pace held strong for a second day, with 3.27 billion shares traded near midday.Shares of Supervalu dropped 5.9% to USD 9.04, while Safeway was down 3.5% at USD 21.71, and Whole Foods fell 3.6% to USD 48.91. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
